NAIROBI (Reuters) - Kenyan Finance Minister Henry Rotich was arrested on Monday on suspicion of financial misconduct related to the construction of two dams, an unprecedented detention of a sitting minister for corruption in a country notorious for graft.
Charges against Rotich, announced on Monday, stem from a police investigation into the misuse of funds in a dam project overseen by the Italian construction company CMC Di Ravenna.
Rotich denied any wrongdoing in a large newspaper advertisement in March. The company has previously denied any wrongdoing.
Rotich and his co-accused face eight charges, ranging from conspiring to defraud and financial misconduct, Noordin Haji, the director of public prosecutions, said. The minister and other officials will have to resign immediately, he said.
Rotich was arrested shortly after the charges were announced, George Kinoti, the head of the police Directorate of Criminal Investigations, told Reuters in a text message. Suspects must be produced in court within 24 hours of an arrest.
The minister will be charged along with 27 other people, including Italian Paolo Porcelli, the director of CMC di Ravenna; and Rotich’s number two at the ministry, Kamau Thugge, the principal secretary.
“They broke the law on public finance management under the guise of carrying out legitimate commercial transactions, colossal amounts were unjustifiably and illegally paid out through a well choreographed scheme by government officers in collusion with private individuals and institutions,” Haji told a news conference.
The two dams were budgeted to cost 46 billion shillings ($446 million), he said, but the treasury borrowed 63 billion instead, needlessly ratcheting up Kenya’s ballooning public debt, which stands at around 55% of GDP.
“This kind of crime and irresponsibility enslaves us with unnecessary debt and mortgages our future generations,” Haji said.
Kenyan prosecutors have requested help from British and Italian authorities, Haji said, and more charges could result.
President Uhuru Kenyatta’s office declined to comment on Rotich’s replacement.
CMC di Ravenna told Reuters in March that it had received slightly more than $75 million in advance payments for the two dams, planned in western Kenya. At that time, the company disputed a statement by the Kenyan police that little work had been done, saying it was nearly a third finished.
Market reaction to the news was relatively muted, with little change in the shilling. Kenya’s dollar bonds maturing in 2028, 2032 and 2048 slipped around 0.5 cents in the dollar, according to data by Tradeweb.
Rotich’s indictment may also be seen as further evidence of a growing distance between Kenyatta and Deputy President William Ruto.
Kenyatta appointed Rotich in 2013 at Ruto’s request. Ruto has made clear that he expects to receive the ruling coalition’s nomination for the presidency in the 2022, despite objections from some in Kenyatta’s camp. Kenyatta will have served two terms and be ineligible to run again.
Earlier this year, Rotich’s questioning by police provoked an angry reaction among politicians from Ruto and Rotich’s powerful Kalenjin ethnic group. Their home area saw some of the worst violence after the disputed 2007 elections, in which 1,200 people died.
Ruto’s supporters have repeatedly accused police and prosecutors of trying to derail his presidential ambitions, said Ngunjiri Wambugu, who is opposed to Ruto’s candidacy.
“There was a lot of claims especially from the Ruto wing of (the ruling coalition) Jubilee that corruption was being weaponised against them. And there was a lot of vicious attacks,” he told Reuters.
Haji closed his press conference with a pointed warning against politicians using the case to score points.
“Corruption always fights back,” he said. “There may be elements who may seek to exploit these indictments to instigate social unrest.”
At the main office for criminal investigations, Ruto’s allies played down the charges.
“There is nothing to worry about. Relax,” Kipchumba Murkomen, the senate majority leader and a Ruto ally, told reporters gathered outside.
Critics accused Kenyatta of failing to deal with corruption during his first term, despite his promises to do so when he was first elected in 2013. Now more people are being charged, but successful prosecutions are rare.
Hundreds of senior government officials and business people are already facing various charges related to corruption, including the chairman of the National Land Commission, the managing director of the Kenya Railways Corporation, the deputy chief justice, the CEO of Kenya Power and the head of Kenya Pipeline Company.
None of the cases has resulted in a conviction.
Auditor general Edward Ouko has said his detailed reports on corruption are often ignored. Corrupt judges interfere with cases and the government’s own anti-corruption watchdog built cases that were too weak to prosecute, Haji said last year.
Rotich’s arrest was a “significant” step on a very long road, said Samuel Kimeu, the head of Kenya’s chapter of Transparency International. But he added:
“I would not be celebrating arrests. We need to see people in jail and we need to see what has been stolen recovered.”
($1 = 103.2000 Kenyan shillings)
Additional reporting by Katharine Houreld, Humphrey Malalo and George Obulutsa in Nairobi, Karin Strohecker in London and Stephen Jewkes in Milan; Writing by Katharine Houreld; Editing by Frances Kerry